Camp San Luis Obispo office OK’d $15.2 million in fraudulent claims

July 14, 2011

By LISA RIZZO

A former California National Guard manager admits she submitted $15.2 million in false and fraudulent claims to the United States Department of Defense (USDOD)—all of which was approved at an office at Camp San Luis Obispo, then wrongfully paid out in the form of bonuses and loan repayments to fellow members of the Guard.

The guilty plea is part of the first major prosecution as a result of a criminal probe that was prompted by a federal auditor working at Camp San Luis Obispo who turned whistle-blower.

Retired Master Sgt. Toni Jaffe, 52, agreed to a plea deal filed Monday in a Los Angeles federal court and included her confession and a single count of making false claims against the United States.

As the bonus and incentive manager for the California National Guard for more than 15 years, the Citrus Heights resident admitted she routinely submitted claims to pay bonuses to fellow members of the Guard whom she knew were not entitled. She also paid off loans for officers, even though she knew they were ineligible for repayment, according to the plea agreement obtained by CalCoastNews.

According to the U.S. Attorney’s Office in Los Angeles, Jaffe submitted each false and fraudulent claim to the United States Property and Fiscal Office (USPFO), which is located at Camp San Luis Obispo. The local agency then certified the illegal claims and further led the USDOD to pay out of federal funds.

In effect, the USPFO failed to catch fictitious claims that in some cases were also illegal from the start because they exceeded legal monetary limits on loan repayments. For example, the law allows the USDOD to pay off eligible student loans to qualifying members of the Guard not to exceed $3,000 a year and up to $20,000 total.

However, Jaffe submitted claims that exceeded both limitations and the San Luis Obispo County-headquartered agency approved them, resulting in illegal payoffs, according to the plea deal.

In addition, some of the claims were also illegal on the basis that they were not qualified student loans, rather personal loans where the debts could have been incurred to purchase a car or cover other private expenses.

While Jaffe accepts responsibility for the government’s loss of $15.2 million, which resulted from hundreds of false claims from at least 2007 to 2009, she is only being charged for a single incident as part of the plea deal. That charge of making false claims against the United States carries a maximum statutory sentence of five years imprisonment and three years of supervised release.

She is also required to pay restitution to the United States, which is currently estimated to be $15.2 million. While the audit determining the full loss amount is ongoing, prosecution of the crimes is limited to a three-year statute of limitations.

The imminent conviction is the first prosecution following a massive audit scrutinizing more than $1 billion of the state program, which was centered at the Camp San Luis Obispo facilities, known by federal auditors as “ground zero.”

Last year, following their discovery of upwards of $100 million in misused federal funds, Jaffe’s replacements briefed federal auditor Capt. Ronald Clark who was hired to review funds spent by the California Guard.

Clark quickly became a whistle-blower leaking the findings to The Sacramento Bee the Internal Revenue Service, and the FBI to prevent the fraud from being covered up.

“I knew very quickly and very early on that they were looking to bury this,” said Capt. Clark who transferred to San Luis Obispo to conduct the review. “They had hand-selected their own federal agent [Department of the Army Criminal Investigative Division agent] to do damage control and minimize it.

“I was pointing at the moon and he was looking at my finger. He was not the right guy, so I went to the feds.”

Clark, being a former FBI agent and U.S. Secret Service officer, is no stranger to fighting white-collar crimes. He said the pressure to “brush this under the rug” came from the Guard’s concerns that public exposure of Jaffe’s “legacy of fraud” would create a “mass shaming during a war effort” and could in turn “affect troop levels or impact national security.”

The reality, Clark said, was the fact that many Guard officers would be implicated as recipients or enablers of improper payments.

Based on reductions in the plea agreement that eventually settled at $15.2 million, it appears Jaffe was given a break because investigators could not prove she profited financially.

“She acted like she was the CEO of her own personal business and she acted with impunity,” Clark said. “They called her the M&M lady” because of the trinkets in her office and the many handouts she gave like candy.

Clark said he believes she did it for attention and was doted on by fellow guardsmen, gaining in small gifts, dinners, trinkets, and even a helicopter ride.

The mentality is that “federal money is there to steal because there is no watch dog,” Clark said. And when there is, “there is no one watching the watchers.”

Bigger than the Jaffe problem, Clark said, is the “good old boys club” at the Guard which is very damaging to the rank and file soldiers and those that fight in the war zones.

“This is the oldest organization in America. They exist for one reason and one reason only,” Clark said. “They will tell you they exist for national security but the reality is they exist to launder federal money.”

In San Luis Obispo, Clark said those certifying the illegal claims reacted with indifference toward the audit and its findings partly due to their volume of work, and secondly to the fact that the money came from a “different kettle of funds.”

Changes have been made at the USPFO since the discovery, according to Assistant U.S. Attorney Aaron May in Los Angeles. While the California National Guard’s Pubic Affairs Office agreed to comment, they had yet to respond to CalCoastNews’ questions within the deadline.

Clark is trying to transfer to the U.S. Army Reserve Control group because he no longer wants to be a part of the Guard. His transfer is pending formal approval.

“I am just one inconsequential captain that yanked their sheets and exposed them for what they are… a continuing criminal enterprise,” he said.

After Clark brought the fraud discovery to federal authorities, the U.S. Department of Justice, FBI, IRS and the Army Criminal Investigation Division took over his audit, which was never completed.

The criminal probe is ongoing, according to Assistant U.S. Attorney May. Some members of the California National Guard may be approached, questioned, or even charged for their role in the scandal and may be asked to pay back any illegitimate payments received.

In a statement, U.S. Attorney André Birotte Jr. in Los Angeles said, “The deliberate misappropriation of tens of millions of dollars of federal government money is unacceptable, and those responsible for stealing federal money through fraud will be prosecuted to the fullest extent of the law.”

39 Comments

“This is the oldest organization in America. They exist for one reason and one reason only,” Clark said. “They will tell you they exist for national security but the reality is they exist to launder federal money… “exposed them for what they are… a continuing criminal enterprise,” he said.

Captain Clark, it sounds like you are one person that finally “gets it.” This sounds like a huge number of federal and state agencies and their present behavior. In the U.S., organized crime and corruption reign supreme… it has simply been presented by the media as something other than that.

Can’t understand a plea bargin when they had her on all 15 counts. They could have put her away for the rest of her life. So instead she’ll get a slap on the hand and be expected to pay back $15 million dollars. Sure… and I have a bridge I would like to sell you as well!

This pleas bargain will probably include a severance payout along with retirement and medical benefits.
There will probably be a sexual harassment charge against the State of California and an out of court settlement wil be made.
You have to just love it.

Sure wish they would investigate san luis obispo county public guardians office for embezzlement and theft of the senior citizens assets that they are suppose to be protecting. Who is guarding the public guardians. This agency needs to be stopped and those people prosecuted. They are in the business of taking control of senior citizens assets, selling them off, and collecting a commission off from each and every one of them. They sold my husbands grandfathers reverse mortgage 5 times, and collected a commission every time. Government agencies legally stealing, are they any better than RPL owners and EFI owners, well no, they just think they have the legal right to do it. Investigate this agency Cal Coast, I think you will be shocked at the amount of corruption this agency is under.

CPT Clark here. Thank you for your kind words of support. To clarify, my actions cost me two careers: one as a federal auditor, one as a member of the Cal Guard; the latter of which is really no loss considering the company I was keeping. In any event, I have moved on to the private sector and continue to cooperate with the federal authorities, CA legislative staffers seeking to install an independent inspector general whom reports directly to the governor and, of course, the press. It goes beyond words that cowards such as these would finagle their way into a military uniform to steal YOUR hard-earned taxpayer dollars; there is lower life form. I will continue to fight and expose these impostors to the extent I am able. What can you do? Write Senator Blakeslee and implore him to support SB 921 calling for this independent inspector general and insist that he support a measure to defund the California Military Department aka State Active Duty that is the state tax dollar supported cartel that causes this fraud to continue. I did what I could…the rest is up to you.

Heaven! I’m in Heaven…I think I’ve died and gone to Heaven! Just when I think there is no ethical culture in our modern bureaucracy, this is a great morale booster! HOWEVER! Since this is too friggin’ good to be true, I need some assurance you are not Julian Assange in disguise, attempting to confuse your digital audience. I need a case number for the Federal case…

Then, I would like to kiss your sweet little ass, Mr. Clark, and bake you an American pie!

In San Luis Obispo, everyone bitches about how much they have to give the Feds, how little the Feds do for them, blah, blah, blah. In this county, they cheerfully support “our boys in Iraq,” fill up the the Ford 350 with about 50 gallons of gas and go careening down Oceano’s “Sand Highway” as their “contribution” to the war effort. But God forbid they should join into a meaningful discussion about national politics, where they get to hear both sides of the argument. I can’t think of a better morale booster than reading about your story because you will provide a role model and an example of what Respect Honor and Loyalty are all about.

And by the way, Oceano is looking for a PERMANENT general manager to run the town’s Community Services District. You have to know how to add and substract so you can keep the books, and dig a trench to know how to maintain our water and sewer. Your “dual capacity” work experience will make you a great fit for our town of 7,600 inhabitants.

Thank-you, Mr. Clark! This promises to be good and informative reading. Keep up the excellent work. You do the Army proud, and anyone working with you should respect you for the courage it takes to stand up against someone you know and say, “This is wrong.”

If you are interested in reading Oceano’s “Agenda packets,” these are the documents which tell Oceano residents and the public about what business Oceano’s Board of Directors has conducted over the prior two week period; and the business which it will undertake over the next two weeks. You can read these public documents which detail the business of the “OCSD” on the town’s web site at http://www.oceanocsd.org. You can also listen to the audio and video of the meetings. Patrick Schimandle is our town’s techie, if you have questions or issues accessing the sight. Our biggest expense and issue these days is, water and sewer. Other committees, advisory councils and “special districts,”

A great web site, which tells you about “special districts” is the LAFO website. (Local Area Formation Commission). There is one for the state of California ( http://www.calafco.org) and one for our county (www.slolafco.com).

The Oceano Community Services District was formed to provide five essential services to the town: water and sewer, street lighting, garbage, and fire protection. However, if you love blizzards of bureaucratic paperwork, the most valuable but complicated reading concerns Oceano’s water supply: everyone wants to buy it and take Oceano’s development potential with it.

At the same time, California as a state is trying to manage its water resources by means of a cooperative, statewide effort. Ironically, the best way to identify the players and agencies is by reading portions of case law (not normally thought of a “forum for cooperative effort…”)

Here it is:
Santa Maria Valley Water Conservation District v. City of Santa Maria et al. and Related Cross-Actions.

You should start by looking at the Judge’s orders and any Settlement Agreements first. Then, there will be a Notice of Appearance by parties and their attorneys which comprise a few pages of names and addresses.

I hope you find this reply and that I did not wait too long to reply…..

It is any wonder we are in the trouble we are in. Wheel barrels of cash missing in Iraq at the onsite of the war ten years ago. Karzi’s brother leading the Afganstine Bank (although he just got his due), trillions missing in our defense department and if this is happening to the California National Guard, multiple it times 50. Obama’s change we can all believe in… I say let the whole damn thing collapse and everyone can rebuild because the corruption is worst than all the other issues we are dealing with: wars, illegals, entitlemen ts, financial institutions,,,,,,,,,,,,, It is a mess and not getting any better for sure!

This is so “typical” for the very corrupt SLO County. Fine her, send her to the slammer & MAYBE the rest of the crooks in SLO County government will “get the message” & stop screwing over the tax payers.